Multiple factors hit industry performance: PHD Chamber

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SME Times News Bureau | 13 Apr, 2013
Industrial activity has been impacted by high interest rates, sticky inflationary scenario, volatile exchange rates, high fuel and raw material costs and weak external demand, President, and PHD Chamber of Commerce & Industry, Suman Jyoti Khaitan said in press statement on Friday.

"Repo rate should be reduced by at least 100 basis points immediately to induce investments scenario in the industry sector and to refuel the growth momentum. Tight monetary stance by RBI has impacted investment sentiments in the economy and inflation still remains in an uncomfortable growth trajectory," said Khaitan

WPI inflation for the month of February has been estimated at 6.8 percent and CPI inflation for the month of February has been estimated at 10.9 percent.

The country has substantial room for improving its business confidence to boost corporate sector investments. And corporate sector investments can be enhanced by reducing the costs of doing business and improving governance, he said.

The growth of IIP for the month of February 2013 has declined to 0.6 percent as compared with 4.3 percent in February 2012, 3.6 percent in February 2011 and 15.1 percent in February 2010.

It is discouraging to note that our manufacturing sector, which accounts for more than 75 percent of industrial production, has witnessed only 1 percent growth in April-February FY2012-13 period, said Khaitan.

The manufacturing sector has been showing a steady decline over the last two years. After a strong run in the 2000s, where manufacturing grew in tandem with strong GDP growth, the sector has grown slower than the GDP for several quarters in a row.

However, growth in the capital goods segment at 9.5 percent is inspiring. Capital goods are a lead investment indicator and very crucial for enhancing industrial production in the economy, said khaitan.